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The basic interdependent components of the Capital Homestead strategy are like the legs of a three-legged stool:
- Democratization of productive credit. Capital Homesteading would reform monetary policy to conform to the goal of sustainable, market-oriented, non-inflationary growth. The new policies would aim at an immediate reduction in prime supply-side credit charges to 3% (without subsidies) for private-sector investment, through a two-tiered credit policy. Central banks would:
(a) Be restrained from further monetization of deficits or encouraging other forms of non-productive uses of credit (i.e., demand-side credit), which would then be forced to seek out already accumulated savings at market interest rates; and
(b) Use the Fed discount mechanism exclusively for discounting, at low discount charges but subject to a 100% reserve requirement, "eligible" industrial, agricultural and commercial paper financed through its member commercial banks. This reform would synchronize the supply of real money with real growth of the economy. It would provide, from the bottom-up, an asset-backed currency reflected in more efficient instruments of production and keep basic economic decisions and corporate accountability in local hands.
- Simplification of tax systems. Capital Homesteading reforms would be centered around taxing incomes from all sources (above poverty levels) at a single rate. This would offer a universal yardstick for political hopefuls to compete against, and a direct means for:
(a) Balancing national budgets and restraining overall spending, including social security and Medicare programs;
(b) Ending the use of the tax system to circumvent the appropriations process; and
(c) Eliminating double taxation of profits in ways that maximize greater savings and investments in new plant, equipment, rentable space and infrastructure, plus removing other taxes that discourage expanded capital ownership as a basic pillar of national economic policy.
- Linkage between all tax and monetary reforms to the goal of expanded capital ownership. This would encourage every citizen to share directly in the equity growth and profits from our ever-expanding high-technology frontier, and would insure the broadest possible base of private sector stakeholders (and thus political supporters) of reforms affecting "green growth" policies.
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| In contrast to mounting social security deficits, this strategy would create for every voter a "Capital Homestead Exemption" for accumulating over his or her working lifetime an income-producing, tax-sheltered personal estate of up to $1 million, a modern equivalent of the 160 acres of land that government made accessible to American pioneers. |
| Citizens would accumulate their Capital Homestead shares in many ways, including such "credit democratization" vehicles as: Employee Stock Ownership Plans (ESOPs); Capital Homestead Accounts (CHAs); Consumer Stock Ownership Plans (CSOPs); and Community Investment Corporations (CICs). These high-powered financing vehicles would systematically close the wealth and income gap by linking all new monetary and tax incentives for productivity growth under the proposed Capital Homestead strategy, with an ever-expanding base of empowered citizen-shareholders. |
| CAPITAL HOMESTEADING VEHICLES |
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For more details, see "The Capital Homestead Act: National Infrastructural Reforms to Make Every Citizen a Shareholder," published by the Center for Economic and Social Justice, Arlington, VA.
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- See also "Beyond ESOP: Steps Toward Tax Justice," Chapter 8 in Curing World Poverty: The New Role of Property, John H. Miller, ed., Social Justice Review: St. Louis, 1994.
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- To obtain these and other writings on tax and monetary reforms to promote expanded capital ownership, see the publications list.
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